WSJ article on NextWave / Lucent stuff.
July 3, 2001
NextWave Sets Deal With Lucent
To Begin Building Wireless Network
By YOCHI J. DREAZEN
Staff Reporter of THE WALL STREET JOURNAL
NextWave Telecom Inc. said it hired Lucent Technologies Inc. to build the
first phase of a planned wireless voice and data network, signaling that the
bankrupt company plans to begin using the coveted spectrum it won back
from federal regulators last month.
The $100 million, all-cash deal calls for Lucent to build the early stages of a
network capable of offering wireless voice and data services in Detroit and in
Madison, Wis., as well as wireless-data services in NextWave's remaining 93
markets. NextWave, Hawthorne, N.Y., said the work should be completed
within 10 months.
The contract is the first indication NextWave
plans to fulfill its promise to use the spectrum it
is to get from the Federal Communications
Commission later this year. NextWave won the
spectrum at a 1996 FCC auction for $4.7 billion,
but the government reclaimed the licenses after
the company failed to meet its debt obligations.
The FCC later resold the spectrum to other
wireless companies for nearly $17 billion, but the
reauction was thrown into disarray a few weeks
ago when a federal appeals court ruled the FCC
broke the law by repossessing the spectrum and
ordered it returned to NextWave.
Despite Monday's announcement that NextWave
would use the spectrum, many analysts believe
NextWave will ultimately reach a deal with the
FCC that would transfer the spectrum to AT&T
Wireless and other winners of the reauction in
exchange for several billion dollars. Political
opposition to the high cost the Treasury would pay to get the spectrum back
would make it extraordinarily difficult for the two sides to reach agreement,
however, even if they were both amenable to a settlement. For now, there isn't
any indication that is the case.
The FCC, for instance, is still considering whether to appeal the ruling, a move
favored by senior officials at the regulatory agency who feel the specter of
further litigation will pressure NextWave into beginning settlement talks with
the government. NextWave, meanwhile, has been adamant it will press ahead
with plans to build itself into a provider of high-speed mobile Internet access.
"It's somewhat offensive for everyone to keep talking about a settlement," said
NextWave Chief Executive Officer and Chairman Allen Salmasi. "If the goal
were to settle, I wouldn't have wasted six years of my life fighting the FCC."
NextWave said it will announce deals with other network and equipment
makers in coming months and hopes to have elements of its network up and
running by December. The company estimates it will spend about $3 billion on
the network.
For Lucent the deal represents another burst of good news after an especially
rocky period that has seen the company's share price plummet amid questions
about its survival as a stand-alone venture. In recent months, Lucent has
reached a number of deals to provide equipment for next-generation wireless
services, including a $1 billion dollar pact with Sprint PCS last week. A Lucent
spokeswoman said the two companies had been in discussions prior to
NextWave's forfeiture of the spectrum and said the companies restarted the
talks after the court ruling last month.
-- Dennis Berman contributed to this article
Write to Yochi J. Dreazen at yochi.dreazen@wsj.com
Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved. |
